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After Hyundai and Honda, Nissans sub-brand Datsun now has its sights on Indias top-selling car, the Maruti Suzuki Alto. Expected to be launched in 2015-16, Datsuns third model planned for India (code-named I2) will be in the R2-3 lakh entry car segment, multiple sources told FE.

The I2 will aim to sell around 8,000- 9,000 units a month in the mini-car segment Hyundais Eon today has similar volumes, while segment leader Marutis Alto sells about 20,000 units. Mini cars, the second-largest car segment, currently accounts for about 20% of Indias 27 lakh passenger vehicle market.

Nissan Motor India vice-president (business management) Ajay Raghuvanshi confirmed, First will be Go and Go+, then the third car is most likely another small car in the Alto segment which is huge. Everything will depend on the Datsun Gos reach, because this will decide the fate of the brand. It will be the first touch point of the brand and all our energies are on to make it successful in India.

Car market leader Maruti Suzuki, which has enjoyed dominance of the mini-car segment for long, is now seeing increasing competition in its stronghold. Hyundai, which had the ageing Santro, was the first major rival with the sharply-designed Eon in 2011. Though General Motors also sells the Spark in the segment with very low volumes of about 300 units, major competition is now also expected from Honda which is rapidly expanding its product range in the mass car segments. Honda is believed to be planning an entry hatchback below the Brio by 2017, for which it may build a new third plant.

Datsun, a Nissan sub-brand resurrected this year after 27 years for emerging markets like India, Indonesia and Russia, will mark its entry with the launch of the Go hatch (Rs 3-4 lakh segment) and GO+ MPV in India next year. But the third entry sedan model, that is due for launch in Russia, may not come to India, with Datsun opting for a second hatchback instead.

There is no plan yet to launch a Datsun entry sedan, Nissan is currently focussing on getting volumes from the Sunny, Micra, Evalia and Terrano. Also, the numbers should come from Datsun Go and Go+. Our domestic market share is just 1.1%, and we have to go to at least 2.5% next year. With Datsun coming in, we will first consolidate our position in India, Raghuvanshi said. Nissans total volumes in April-November FY14 have declined 18.4% at 21,562 units, though sales in the past few months have improved since the recent launch of the Terrano compact SUV.

Incidentally, Nissan is also planning a captive finance arm like Volkswagen, Mercedes-Benz and BMW. Registered as an NBFC, the group financing company from Nissan, Datsun and Renault, will launch attractive finance schemes and help push sales. Reach and availability of finance is critical in the small car segment. Our captive finance arm is under evaluation. It will be a group finance arm, Raghuvanshi said.

Nissan, which sells its own branded products through marketing partner Hover Automotive in India, has decided to instead handle the marketing and sales departments for Datsun directly. Initially Nissan dealers (145 planned by March, from 117 today) will sell both Datsun and Nissan cars, while Datsun will also build exclusive dealers in new regions.

We are targeting 5% of the rural market share initially. It is an important market at a time when sales in urban areas are hit. Overall, 65% of sales should come from tier II and III cities, Raghuvanshi said.